What Is Direct-to-Consumer (DTC) Marketing?

What Is Direct-to-Consumer (DTC) Marketing?
02 July, 2022 • ... • 606 views
Alexey Baguzin
by Alexey Baguzin

Before the internet burst onto the scene, consumers had two options if they wanted to buy something:

  • Order the item and wait till it was delivered by post.
  • Go to a local store and purchase it there.

Brands relied on intermediaries to sell their products. The emergence of e-commerce changed that. Businesses now have another option to market and sell the goods: direct to consumers (aka DTC marketing).

What does DTC marketing mean?

In simple terms, it means bypassing the retailers and marketing your goods directly to your customers, for example, via your website, social media accounts, marketplaces, etc.

Short history of DTC marketing

Warby Parker, a US company selling glasses, is considered a pioneer of this approach. They made their grand entrance in 2010, after realizing that the (then) existing glasses market was far from perfect.

80% of it was controlled by Luxottica, an umbrella company for brands such as Ray-Ban, Persol and Oakley. Because of a horizontal supply chain, glasses were too expensive and individual retailers were codependent on each other — except for Luxottica themselves. Retailers had to slash fees in order to sell glasses to end consumers.

Warby Parker found a solution: a vertical supply chain, where they only depended on themselves to sell glasses. The company eliminated retailers from the chain, got rid of all outsourced activities, housed raw materials, and shipped directly to consumers.

This model worked wonders. By 2019 Warby Parker clocked a $250,000 annual profit. By 2021 they doubled that. Aside from depending on themselves only, the company offered their customers free try-on and a 30-day trial period, during which consumers could return the glasses at no cost.

B2C vs DTC marketing

As you’ve already deduced by now, the difference between business-to-consumer and direct-to-consumer approaches is the middlemen. In a DTC model, the manufacturer bypasses retailers completely. 

Here’s how the 2 processes of selling compare:

B2C vs DTC selling models

PROs of DTC marketing

  1. Control and flexibility

When selling directly to consumers, you have full control over:

  • Your marketing strategy
  • Your supply chain
  • Customer experience
  • New product launches

And every other aspect you can think of. You only rely on your own e-commerce solutions, which increases your profit margins and lessens reliance on third-party data and strategies.

Sure, marketplaces like Amazon can help you reach wider audiences, but that will come at the expense of your own brand loyalty and relationship with consumers. On the subject of brand loyalty…

  1. Brand loyalty

Customer loyalty is at the forefront of every brand’s mind. It’s much easier to retain existing customers than to attract new ones, so growing and keeping hold of your consumer base is essential.

And it’s much easier to do that when you can interact directly with your shoppers, whether to solve their problems, find out their preferences or make enticing offers. With middlemen in the picture, you won’t be able to communicate as quickly and as efficiently as you could have otherwise — and your brand image might suffer. It will definitely slowly erode, because shoppers will associate your brand with the retailer they bought your goods at. Bad customer service there won’t do your image any good.

  1. Higher profit margins

If you sell to a retailer, you do so in bulk, at wholesale price. The retailer then sells your goods to the end consumer at a higher price — and keeps the difference to himself.

When you sell directly to your customers though, you get 100% of what they pay. You might even sell at a lower price, because your profit margins will still be awesome. That’s a hell of a fighter in DTC’s corner.

  1. Better understanding of consumers

With intermediaries out of the picture, you can gain better insight into how your customers behave. You can gather feedback and interact directly in any way you see fit — and then collect the data, analyze it, and use the results to improve the quality of your service and products.

You can also predict their future behavior based on the same data. No need to invest in consumer models research: you’ll have all the data first-hand.

CONs of DTC marketing

  1. Setting up the sales chain

Retailers aren’t there to do the job for you. Manufacturing, storing, shipping — it’s all on you. And promotion too, of course, becomes even more crucial with retailers out of the picture. Which leads us to our second point.

  1. You have to be an expert in brand advertising

“You can create a great product, but convincing that it’s great is more important.” Yep, you’ll have to have a sound marketing strategy in place.

There’s a myriad of strategies you can rely on (and we’ll stop on the most effective ones anon) but one thing is for sure: you’ll have to differentiate yourself from others, and do it effectively enough. And more often than not you’ll have to rely on online sales channels.

  1. Increased costs

You’ll have to make a significant investment upfront if you’re starting from scratch, to buy the raw materials, find a warehouse, set up the manufacturing process… And you haven’t even dipped your toes into marketing your goods and shipping them.

You’ll need a budget for test products as well — and you might also suffer losses on special offers you make when you start building your customer base. It took Warby Parker 7 years to become profitable — even though they are considered highly successful now, and their bold model indeed merits admiration.

8 unconventional DTC marketing strategies worth your time

Despite the above-mentioned drawbacks, more and more companies go with the DTC model — because of high-profit margins and better control over the whole process. So we’ll examine the most popular DTC marketing tactics — with examples of how others made them work. We’ll break it up into 2 sections: good strategies for brands just starting out and tips for those looking to grow their business.

Just starting out

  1. Stand up for a cause

Remember Warby Parker? Of course, you do. One of the reasons the company became a roaring success was because of their social activism. For every pair of glasses sold they donate another pair to someone in need.

Warby Parker Buy a Pair, Give a Pair initiative
Source: Warby Parker

Another shining example of a brilliant social initiative is Bombas, a US company selling socks and underwear. Much like Warby Parker, Bombas made it their mission to donate a pair of socks (and later underwear and t-shirts too) to an unhoused person, for every item bought. They have donated 40 million apparel goods up to date.

A US brand Allbirds is another case worth mentioning. It’s a company that mostly sells sneakers but not just any sneakers: only those made from environmentally-friendly materials. Needless to say, Allbirds make and distribute those themselves.

Why does social activism work? People love when brands fight for a cause — and savvy marketers know that. According to a Social Sprout study, 70% of consumers believe more brands should take public stands on important social and political issues.

  1. Run a referral program

A US male grooming brand Harry’s pulls this strategy off in sublime fashion. Before launching, Harry’s gathered over 100,000 emails through incentivized referrals — just one of the many possible email marketing campaign ideas you can steal and yet another example of effective email marketing for small businesses.

Harry’s customers went through a simple, two-page process on their website: on the first page they could learn more about the company, and on the second they were given a unique referral link to share. For 10 referrals you got a free razor, for 25 a shave set with a premium handle, and for 50 a year’s supply of shaving goodies.

Why did this strategy work? Customers referred by friends, family members or colleagues have a higher lifetime value, which means they stick around for longer. And the acquisition cost is a low one.

Harry’s referral program
Source: EasyParcel
  1. Go offline

An Indian cold-brew coffee brand Sleepy Owl got its first customers by setting up shop at Jindal Global Law School Sports Fest in March 2016. They followed this up by organizing similar tasting sessions at college fests, events and bazaars.

A Belgian fashion brand Black and Gold used Latin American-themed parties as a launchpad to sell bracelets of their own making. Those bracelets soon became more popular than the parties themselves.

This works well for several reasons: honest and instant consumer feedback helps make the product better, while as a means to spread the word it’s a very cost-effective one.

  1. Give your product away for free

A US eco-friendly active-wear brand Girlfriend Collective did just that to build their initial customer base. Instead of investing in influencers, they channeled their entire budget into word-of-mouth marketing.

They offered their products for the price of shipping (leggings in the example below cost between $70 and $80 in retail). All customers had to do was to share a link to their website on Twitter or Facebook. Within 24 hours of launch, Girlfriend Collective received 10,000 orders and their website crashed because of high traffic.

Girlfriend collective sold luxury leggins for the cost of shipping at launch
Source: HelloMeets

Growth strategies

  1. Rely on user-generated content

If you operate on a relatively small budget, then content generated by your customers can be a real goldmine. According to Nosto, consumers are 2.4 times more likely to trust content created by users like themselves over branded content.

Glossier, a US cosmetics brand selling skincare products, is a good example of how a proper social media strategy can make your brand popular. The company originated from a beauty blog, Into the Gloss, when founder Emily Weiss decided that none of the existing heavyweights provided quality skincare products for younger people — her target audience. So she raised $2M in funding (which naturally wasn’t easy) and launched her own brand.

Emily leaned heavily into digital marketing channels and generated an incredible 600% year-on-year revenue in her first two years after launching in 2014. Below is a perfect example of how a social media post can attract engagement: it provides value without asking anything in return — which helps strengthen the brand’s image.

Glossier user-generated content example on Instagram
Glossier makes a post using the picture one of their clients sent
  1. Use social media influencers

Teaming up with Twitter and Instagram celebrities is another effective strategy. Don’t worry, we are not talking about Elon Musk and Cristiano Ronaldo: just someone who reflects your brand’s values. What matters is that they are preaching to an audience already sympathetic to what they say.

Wellness Indian brand Sarva used social media influencers to good effect. They used International Yoga Day in 2019 to launch a powerful initiative where people explained how yoga changed their lives. The campaign was spearheaded by celebrity influencers like Malaika Arora, Aishwaryaa Dhanush, Akansha Ranjan Kapoor, Kubbra Sait, Yami Gautam.

The result? Sarva’s revenue increased 4x, and their app downloads more than tripled.

  1. Partner with another brand

This can help you achieve a number of goals: from launching your product in a new niche to expanding your base by targeting relevant audiences.

A smart strategy would be to pair up with someone who operates in a field close to your own, of course. That’s exactly what US brand Lettuce Grow did when they teamed up with their compatriot Brightland. The former helps grow clean and healthy vegetables and fruits in your own back garden; the latter sells olive oil and vinegar.

So a product bundle between them made complete sense for both the brands and consumers, as both care about fresh, locally-made, produce.

Lettuce Grow partners with Brightland for a healthy bundle
Source: Hello Subscription
  1. Try out less-saturated marketing channels

Traditional social media platforms are ridiculously crowded nowadays. Which means it’s much harder to get through to your target audience — and also quite expensive.

Combat this by going for less obvious solutions. A US fitness wearable brand WHOOP, for instance, decided to run a podcast on all major platforms. They invite famous athletes to tell their stories and give inspirational advice —  but also to talk about how WHOOP helped them on their journey.

Whoop attract famous athletes to market their brand
Source: Whoop

Podcasting is one example of a relatively new and under-used marketing channel. Make sure to do your research before you dive head-first into such an initiative though: you need to know whether your target audience indeed hangs out where you want to market your products.

Wrapping up

Regardless of your budget, there’s a lot you can do to market your products directly to consumers. There are countless examples of successful brands making it work, despite looking for money at the back of the sofa at the outset. You can easily find many more interesting strategies. But for now, we’ll just recap those mentioned above.

  1. Stand up for a cause
  2. Run a referral program
  3. Go offline
  4. Give your product away for free
  5. Rely on user-generated content
  6. Use social media influencers
  7. Partner with another brand
  8. Try out less-saturated marketing channels
02 July, 2022
Article by
Alexey Baguzin
Alex has an master's in Journalism, a keen interest in eCommerce & email marketing and a background of writing articles dating back to 2015. He reads about copywriting in his spare time, watches Netflix and supports Arsenal. He's into rock of all sorts - most recently Muse.
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